2016-02-21-Bain-Bain_Company_s_Global_Private_Equity_Report_2016_72页_2mb

2016 Global Private Equity Report Summary

Core Content

The 2016 Global Private Equity Report by Bain & Company provides an in-depth analysis of the private equity (PE) industry's performance and strategic direction in 2015, highlighting the resilience of the sector amidst economic and market challenges.

Main Points

1. Bain & Company's Role in the Private Equity Industry

• Bain & Company is the leading consulting partner to the private equity industry, with a global network of over 1,000 professionals.
• The firm's PE consulting business has grown fivefold in 15 years and now constitutes about one-quarter of its global business.
• Bain supports a wide range of clients, including PE firms, hedge funds, and institutional investors such as sovereign wealth funds, pension funds, and family investment offices.

2. Overview of the 2015 Private Equity Market

• The 2015 PE market was marked by a mix of challenges and successes, showing surprising resilience.
• Despite the economic strain and record-low interest rates, the industry maintained healthy performance.
• PE returns continued to outperform public markets, reinforcing investor confidence.

3. Fund-Raising Trends

• Fund-raising in 2015 was robust, with GPs raising $527 billion globally, slightly less than 2014.
• The number of buyout funds and the value of capital sought were up, with 318 global buyout funds on the road.
• The average fund closing time was faster, and more funds hit or exceeded their targets.
• US and non-US GPs both saw success in fund-raising, with US funds raising 112% of their targets and non-US funds 110%.

4. LP Demand and Commitment

• Limited Partners (LPs) were eager to reinvest cash distributions back into PE.
• Over 42% of LPs planned to increase PE commitments in the coming year, and 51% intended to raise allocations over the long term.
• LPs were increasingly open to alternative investment strategies, such as coinvesting and secondary market trading.

5. New PE Investment Strategies

• Coinvesting became a popular method for LPs to gain access to elite GPs or secure better terms.
• The secondary market saw increased participation, with LPs actively trading existing PE fund interests.
• These strategies helped increase liquidity and diversify exposure across different fund vintages.

6. Investment Activity and Deal Making

• Deal value for global buyouts reached $282 billion in 2015, slightly higher than 2014.
• Asia-Pacific deal value surged to $129 billion, outpacing other regions.
• Deals valued between $5 billion and $10 billion increased, indicating growing investor confidence.
• However, larger deals valued at $10 billion or more remained elusive, with only $58 billion allocated to such transactions.

7. Economic and Market Conditions

• The global financial crisis had a relatively mild impact on PE, as many of the affected firms were small and had limited track records.
• The PE industry is now facing new challenges, including the potential for interest rate increases and recession risks.
• PE firms are advised to focus on differentiation, strategic value creation, and preparing for future economic uncertainties.

Key Information

• Fund-Raising:

  • $527 billion raised in 2015, slightly below 2014.
  • 12 large buyout funds targeting $5 billion or more were still on the road at year-end.
  • US and non-US GPs both exceeded their targets.

• LP Demand:

  • LPs were willing to increase their PE allocations, with 90% expecting PE to outperform public markets by at least 2 percentage points.
  • LPs were using alternative methods like coinvesting and secondary market trading to enhance their exposure and returns.

• Investment Activity:

  • Global buyout deal value was $282 billion, with Asia-Pacific leading the way.
  • Larger deals ($5 billion to $10 billion) increased, but megadeals remained rare.

• Market Trends:

  • Dry powder reached a record $1.3 trillion, indicating a strong but cautious investment environment.
  • The PE industry showed resilience and adaptability, with many firms successfully navigating the post-crisis landscape.

• Strategic Outlook:

  • PE firms are advised to focus on strategy, differentiation, and value creation to thrive in a changing market.
  • The need to embrace change and innovation is emphasized, especially in light of new macroeconomic forces.

Key Takeaways

• The PE industry demonstrated resilience and adaptability in 2015.
• Fund-raising and LP demand remained strong, even as deal values and counts grew modestly.
• Coinvesting and secondary market trading are becoming more prevalent strategies for LPs.
• The industry is entering a new normal, with a greater emphasis on strategic differentiation and value creation.
• The PE market is expected to continue its performance edge over public markets, despite upcoming economic uncertainties.